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WithHolding Tax: Budget 2022

Updated: Sep 12, 2022

โœจTaxation Techie Series 7โœจ

๐——๐—œ๐—— ๐—ฌ๐—ข๐—จ ๐—ž๐—ก๐—ข๐—ช ๐—”๐—•๐—ข๐—จ๐—ง ๐—ง๐—›๐—˜ ๐—–๐—›๐—”๐—ก๐—š๐—˜๐—ฆ ๐—ถ๐—ป ๐Ÿฎ๐Ÿฌ๐Ÿฎ๐Ÿฎ?

There are changes made in WITHHOLDING TAX.

What is withholding tax?

Amount deducted from income generated by non-resident (payee) and paid to the Malaysian Inland Revenue Board (payee) is known as withholding tax. A person or entity other than an individual conducting business Malaysia is referred to as a โ€˜payer.โ€™

In the recent announcement of Budget 2022, a new rule that would force businesses to withhold 2% gross payments made to residents who are permitted to represent them in sales, transactions, or schemes under section 107D of the Income Tax Act of 1967 has been suggested in the Budget 2022. And it is effective from 1st January 2022.

So, is there is any threshold amount to determine those agents are subject to withholding tax?

Yes, the 2% withholding tax for 2022 applies to agents, distributors, and dealers (ADD) which have received more than RM100,000 in monetary and/or non-monetary form in 2021 from the company making the payment.

However, the IRB has postponed the introduction of the remittance of withholding tax under section 107D of the ITA 1967 to 31 March 2022 to ensure that all paying companies can make the necessary preparations and notifications to all agents, distribution, and dealers. Best part is you must prepare everything.

When should the company send the withhold tax to IRB?

Any tax withheld by the company must be paid over to the Director General of Inland Revenue (DGIR) within 30 days of paying or crediting the payment. If the company do not pay within 30 days, 10% penalty will be charge on the tax withheld amount.

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